DR RAJARAM L AKHANI Versus ITO, GANDHIDHAM

2016 (6) TMI 1051 - GUJARAT HIGH COURT

Penalty u/s. 271D - cash receipt in violation of conditions of section 269SS - whether the transaction of accepting ₹ 2 lacs from appellant's son was non-commercial and personal in nature? - Held that:- The transaction was between a father and son, to meet the urgent requirement of depositing the margin money in the bank account for buying a vehicle for personal use and thus, it was neither a loan nor deposit nor had anything to do with evasion of tax. Default if any was of a technical or .....

way of this Appeal, the Appellant has challenged the order and judgment dated 16.11.2006 of the Income Tax Appellate Tribunal, Rajkot (SMC) Bench, Rajkot in ITA No.393/RJT/2006 for the Assessment Year : 2003 - 2004 whereby the Tribunal reversed the order and judgment of the CIT (Appeals). 2. While admitting the matter on 28.11.2007, the following substantial question of law was framed by the Court for consideration :- Whether on the facts and in the circumstances of the case, Income Tax Appellat .....

eedings, the Assessing Officer noticed that the appellant had accepted a sum of ₹ 2,00,000/= from his son; the appellant's son had issued a cheque in the name of the appellant, but the son had encashed the same and the cash so received by the appellant was deposited by the appellant in his own account and a draft was taken out in favour of the motor car dealer. The appellant received delivery of the vehicle on 25.11.2005. The respondent made a reference to the Additional CIT, Gandhidha .....

he Additional CIT imposed a penalty of ₹ 2,00,000/= on the ground that the appellant being a learned person and well aware of the provisions could not have ignored the law or could have taken the assistance of an income tax counsel. Being aggrieved and dissatisfied with the above order, an appeal was preferred before the CIT(A) at Rajkot which deleted the penalty holding that the transaction was between a father and son, to meet the urgent requirement of depositing the margin money in the .....

er :- I have carefully considered the submission made by the appellant alongwith the case record and the material brought to my notice. I have also considered the various judicial authorities the appellant has sought support from. The undisputed fats which has emerged from the records are that the appellant received the sum of ₹ 2,00,000/= from his son Dr. Mahesh Akhani who is also assessed to tax. The amount was paid by a bank cheque bearing No.52276 issued on ICICI Bank of Bhuj. This tra .....

the Department Circular No.387 is of a binding nature on the Departmental authorities. There is no dispute in this case that it is not a case when any search and seizure had taken place and it is also not a case of explaining deposits or loan taken through cash in past. It is also evident from the record that the father appellant received the amount from his son for meeting with his urgent requirement of depositing the margin money in bank account for buying a vehicle for his personal use. Penal .....

nk account so that vehicle for personal use could be purchased by father. There is no material or record to suggest that there were any terms between the parties as to the payment of interest or the time of repayment. There is nothing to suggest that it was obligatory upon the father appellant to repay the amount to his son. In absence of such material it cannot be said that the amount received by the appellant was 'loan' or 'deposit' so as to attract provisions of Section 269SS .....

his bona fide belief that for non commercial transaction, father could accept the money from his tax payer son through a bearer bank cheque. It has also been pleaded that there was no mens rea on the part of the appellant. Default if any was of a technical or a venial breach of the provisions of law and therefore no penalty could be imposed under section 271D of the Act. Considering the facts and the submission made by the appellant, I am of the firm view that penalty under section 271D was lev .....

ioner of Income Tax v. Bombay Conductors & Electricals Ltd. (supra), paragraphs 6, 7, 8 and 9 reads as follows :- 6. The object of introduction of s. 269SS of the Act has been stated by the Apex court in the aforesaid case of Asstt. Director of Inspector v. Kum A.B. Shanthi (supra) in the following terms : The object of introducing s. 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, h .....

hich provides that no penalty shall be impossible on a person or an assessee, as the case may be, for any failure referred to in the said provision if the assessee proves that there was reasonable cause for such failure. In other words penalty is not automatic under s. 271D of the Act on mere violation of provisions of s. 269SS of the Act. 7. The Tribunal has found that there is no evidence on record to show that infraction of the provisions was with knowledge or in defiance of the provisions. I .....

s leviable. 8. In light of the findings of the facts recorded by the Tribunal after appreciating evidence on record and applying the ratio of the apex Court decisions it is not possible to find any legal infirmity in the impugned order of the Tribunal. Not only there is a reasonable cause, as found by the Tribunal, but in light of the finding of the Tribunal that the breach, if any, is merely a technical or venial breach no penalty is leviable as laid down by the apex Court merely because it is .....